Weak economy 'dictates price of oil'

24 February 2009

Crude oil prices fell again on Monday as the economic crisis continued to take its toll on the world market.

The downturn has seen global demand for the fuel plummet, causing prices to drop by over $100 (£69) since reaching summer highs of almost $150.

Despite a series of production cuts by Opec, values have continued to fall in recent months and reports this week that further cuts are being planned for March failed to push values up.

Alaron Trading analyst Phil Flynn told Reuters: "Overall, the weakness in the economy is still what's dictating direction for oil prices."

This could be good news for home heating oil customers, who saw the price of US crude oil fall $1.59 on Monday to settle at $38.44.

London Brent crude closed at $40.99 a barrel, down 90 cents on the previous day.

The falls come despite US government data last week which showed a slight increase in oil consumption, prompting suggestions in some quarters that the market could begin to recover in the coming months.

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